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NEW YORK (AP) – The gap is widening between winners and losers in the retail trade.
This has become even more evident on Wednesday with the latest revenue reports: big box stores and non-price retailers are reacting more quickly to the growing shift in online shoppers with increased deliveries and better merchandise. However, many mall-based clothing and department store chains continue to experience low sales while struggling to attract buyers.
"There is a growing polarization in the retail business," said Neil Saunders, managing director of GlobalData Retail. "It's a vicious circle, and it's hard to get out of the queue."
In fact, for the first two quarters of this year, non-mall retailers' profits increased by 3%, compared with a 29% decline for mall-based retailers, according to Retail Metrics, a leading research firm that specializes in retail outlets. retail business. 105 retailers.
Wednesday, Target has raised its forecast of annual results after announcing significant sales and traffic. He was helped by his same-day delivery services, as well as a solid line of local brands. Lowe's, the country's second-largest home goods retailer behind Home Depot, surpassed Wall Street's earnings guidance for the second quarter, buoyed by strong demand for spring products and sales to entrepreneurs.
Both companies' stocks have skyrocketed.
Earlier this week, The Home Depot far exceeded the earnings guidance for the second quarter, while Walmart raised its outlook for the year last week and off the price chains like TJ Maxx's out as well, in resonance with buyers who love treasure hunting.
But many clothing and department store chains have not differentiated their products enough, and discounters are pushing them even further by pushing them to more affordable modes, according to retail analysts.
Last week, Macy's lowered its annual earnings guidance after suffering losses in the second quarter by lowering the prices of unsold products. J.C. Penney's is in the worst condition. He recorded another quarter of sales down. Kohl's shares sold on Tuesday after falling sales, although business improved later in the quarter.
Luxury department store Nordstrom trimmed its revenue and sales outlook for the current fiscal year on Wednesday night after reporting lower earnings and sales in the second quarter. Sales in its stores at current prices fell 6.5%. The results show that he has not been able to escape the misfortunes of traditional shopping malls, even as he tested small stores that do not stock clothes and expand his online services.
Saunders and other analysts say four or five years ago, the gap between retail winners and losers began to widen, but the gap widened due to a combination of factors. . For many years, a strong economy has provided significant benefits to retailers of all stripes, and last year's tax cuts have given traders a nice high sugar. But as the economy begins to crack, vulnerable retailers will become even more vulnerable.
Analysts also say that the shift to online shopping continues to accelerate, giving retailers such as Target and Walmart a significant advantage, as they have been able to invest billions of dollars in online and in-store shipments. Some shopping center retailers are now looking for other ways to bring in buyers, including subscription rental services and spaces for the sale of second-hand clothes.
But for some, it can be a case of too little, too late.
"In a world where consumers have more choices than ever before, lower quality experiences will disappear," said John Mulligan, Target's chief operating officer.
Target's same-store sales, including online sales, increased 3.4% as customers jumped 2.4%. Online sales jumped 34%. The Minneapolis company raised its earnings expectations for the year by sending its shares up 17.47 USD, or 20.4%, to close at 103 USD.
Shares of Lowe's Co., based in Mooresville, North Carolina, reached $ 10.13, or 10.4%, at $ 108.
Still, the moment is still uncertain for fast-growing retailers like Target.
The Trump administration imposed a 25% tariff on Chinese imports at $ 250 billion. A tariff of 10% on $ 300 billion of goods would affect everything from toys to clothes and shoes that China ships to the United States.
And it seems that the retailers who have always been winners will be the ones who will be better able to manage the price storms.
Target chief executive Brian Cornell told analysts that while trade wars add an additional layer of uncertainty and complexity, he emphasized the diversity of the company, its deep global sourcing expertise, and its sophisticated package. manufacturing partners around the world.
At the same time, Macy's said last week that its customers had no interest in raising prices in the context of a rising trade war between the United States and China. The department store was forced to increase the prices of some luggage, household items and furniture to offset the costs of a 25% tariff set up in May. Macy's has promised not to raise prices because of the 10% tariff, but its CEO, Jeff Gennette, said the company would talk with suppliers about ways to offset rising costs if the trade war intensified. .
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Follow Anne D'Innocenzio on Twitter .
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This story has been updated to correctly identify the Target leader cited in reference to physical stores. It is the chief operating officer, John Mulligan, not the CEO, Brian Cornell.
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